Loot, iLvl and progression?

Anyone know how the loot drops will be determined in diablo 3 based off what is already known from the beta?

Will normal monsters (regular fallen and such) have a really low droprate for magic, rare, set and uniq-- sorry, legendary items based on your MF like it's predecessor?
Will the iLvl of the item be the only limiting factor of what can drop an item, like how diablo 2 was or will some items being lore-based like legendaries be only dropped by specific bosses?

Was there any word at blizzcon as to how they plan on making variety more appealing than runs for this mode?